IOI Properties' Q1 earnings fall on weaker contribution from key business

IOI Properties' Q1 earnings fall on weaker contribution from key business

KUALA LUMPUR: IOI Properties Group Bhd's net profit dropped 72.8 per cent year-on-year (YoY) to RM174.45 million in its first quarter ended Sept 30, 2023 (Q1FY24) from RM640.29 million a year earlier.

This was due to weaker contribution from the property development segment in Malaysia and China recording lower sales. 

Nevertheless, IOI Properties said the weaker performance of the segment was partially offset by the significant improvement in the property investment segment.

Revenue for the quarter was down by 6.3 per cent to RM648.05 million versus RM691.52 million in the corresponding quarter last year due to the decline in property development's revenue by 15 per cent. 

The contraction was partially offset by the improved performance in the property investment segment by 31 per cent. 

It added that despite closure of Palm Garden Hotel, A Tribute Portfolio Hotel and Putrajaya Marriott Hotel, the revenue from the hospitality and leisure segment was maintained and supported by higher contributions from other hotels.

For Q1, the property development segment achieved sales of RM587 million whereby local projects contributed RM572.6 million, which was 98 per cent of the total sales, while overseas projects in China contributed RM14.4 million, or the remaining 2.0 per cent. 

In Malaysia, the sales secured were largely from the Johor region at RM400.5 million, led by the sales of agriculture land at Kulai while established townships at Bandar Putra Kulai and Taman Kempas Utama continued to outperform. 

Over in Klang Valley region, the ongoing projects registered sales of RM163.1 million led by the established township at Bandar Puteri Puchong in Selangor and its integrated development at IOI Resort City in Putrajaya. 

A total of RM1.13 billion worth of properties were launched during the period.

"We take cognisant that the operating environment both within and outside Malaysia will continue to face some headwinds. 

"However, our wide property product offerings diversified across three countries, recurring earnings from established property investment portfolios and improving prospects for the hospitality and leisure segment will provide the group with a strong foundation for sustained earnings ahead." said group chief executive officer Lee Yeow Seng. 

The company added that the outlook in China remains subdued as the economic recovery is weaker than expected. 

"On the monetary front, the central bank has ramped up liquidity injection to boost the ailing property sector. 

"We continue to position our developments at IOI Palm City and IOI Palm International Parkhouse in Xiamen as completed projects with immediate delivery, providing greater confidence to the Chinese purchasers, who are buying for immediate use.

"In addition, IOI Business Park Xiamen with net lettable area of 371,000 square feet and committed tenancies at 70% will bring higher footfalls and provide more business activities to complement IOI Mall Xiamen," said the company in a statement.

Source: New Straits Times